Smartphones power Samsung profit

Technology giant Samsung saw its profits leap by 41% in the first quarter of this year, thanks to a surge in sales of its smartphones.

The South Korean company made a net profit of 7.15 trillion won (around £4.2 billion) for the period, up from 5.05 trillion won a year ago.

The results will be a bitter blow for rival Apple, which this week announced its first profit slide in nearly a decade.

According to the figures, Samsung's revenues fell slightly on the previous quarter, down 6% at 52.87 trillion won (around £30.6 billion), though profits were up on the last three months of 2012.

The company's thriving smartphone sector has been behind much of its success. Smartphone and mobile communications sales leapt 7% on the last quarter to 32.82 trillion won (£19 billion), accounting for around 75% of the company's profits.

However, Samsung predicted that growth in smartphone sales would stay flat in the coming months amid intensifying competition in the lower and middle sections of the market, before picking up in the second half of the year. Robert Yi, head of investor relations, said: "We may experience stiffer competition in the mobile business due to expansion in the mid to low-end smartphone market."

Samsung's latest smartphone offering, the Galaxy S4, goes on sale in the UK on Saturday. The device, which allows users to control the screen using their eyes, is expected to give the company another boost, and is said to pose the greatest threat yet to Apple's iPhone.

Samsung's positive results, after a strong year in which it saw its range of Galaxy handsets snapped up across the world, will prove a headache for Apple. Earlier this week the American company posted profits of £6.27 billion (9.56 billion US dollars), down £1.38 billion (2.1 billion US dollars) from the same time last year.

Jan Dawson, an analyst at research firm Ovum, said Samsung's mobile business performed well in the first quarter of 2013, despite the fact that the previous three months are usually the biggest of the year. She said: "Certainly it looks like year-on-year growth was much higher for Samsung's mobile phone unit than for Apple's iPhone segment. That's a testament to the broad appeal of Samsung's device range compared with the relatively high-end focus of the iPhone.

"It's also helpful that Samsung has device launches throughout the year, which help to keep demand going on a more consistent basis, whereas Apple suffers from strong seasonality. It also increased profits significantly both year on year and quarter on quarter in that business unit, in contrast with Apple, although Apple's margins are likely still much higher in its phone business. The next quarter should see a rise in marketing spending around the launch of the Galaxy S4, which may impact margins, though shipments should also go up."